Last week, I wrote a small piece about the Albanese government's war on big tech.

I mentioned the US billionaire Peter Thiel and said it was important to know how he thinks about things.

We didn't have time to go into these things deeply, so let's explore some.

Because it's useful to know who the government may pit itself against as it tries to prevent disinformation spreading online, and stop younger Australians using social media.

The story behind an important word

Let's start with a question.

What is a "capitalist"?

Given how meanings change over time, what do we mean today when we use the word?

Michael Sonenscher, a fellow of King's College at the University of Cambridge, published a neat little book on this question in 2022, titled "Capitalism: The story behind the word."

He says the French word capitaliste began to appear in French discussions of war and debt mainly after the War of Austrian Succession (1740 —1748).

He says it referred to someone who supplied one of the branches of the French royal government with the capital they needed to fund the costs of war.

Is that what we mean by "capitalist" today?

Following that, Sonenscher says it wasn't until the 1820s that the French word capitalisme was being used to describe a social system.

He says that social system was one in which public debt, the contemporary system of war finance (thank you capitalistes), the division of labour and the accumulation of capital, so-called commercial society, and competition between states were beginning to be understood to be key features.

Is that what we're referring to when we talk about "capitalism" today?

If you're interested, you can hear Sonenscher talk about the history of both words in this 49-min podcast.

In that podcast, he reminds us that the Scottish philosopher David Hume was a famous critic of the system of war finance in the eighteenth century.

Now, in last week's piece, I mentioned how Peter Thiel considers himself a capitalist.

No one would disagree with him on that point.

I also noted that, according to an essay Mr Thiel published in 2009, he doesn't think freedom and democracy are compatible, and he thinks the notion of "capitalist democracy" is an oxymoron.

He equates freedom with capitalism, and thinks democracy is a threat to both.

Do you agree with him?

Schumpeter, Hayek and the threat of democracy

It's a fascinating idea to think about, even if it's not new.

Friedrich Hayek, the famous Austrian economist and one of the original neoliberals, said if he had to choose between democracy and capitalism, his choice would be clear. 

"I have belatedly come to agree with Josef Schumpeter who 30 years ago argued that there was an irreconcilable conflict between democracy and capitalism," he wrote in 1967.

But there's another essay of Mr Thiel's that's worth reading, too. 

It's called "The Straussian Moment."

Published in 2007, the historical context of his essay is important. It was six years after September 11. Four years after the US invaded Iraq (with Australia's help).

In that essay, Mr Thiel wondered how the "unfolding confrontation between the West and Islam" was going to play out in the 21st century.

(I'm not endorsing his argument, by the way).

He said the Enlightenment had left the West ill-equipped to deal with an enemy that believed so strongly in the afterlife.

He said the thinkers of the Enlightenment committed a "major strategic retreat" when they convinced people to stop caring so much about religion so we'd all stop fighting and get along.

Why? Because it meant that, in the past couple of hundred years, we've stopped asking questions that used to be considered central and which gave western society a stronger sense of self:

"What is a well-lived life? What does it mean to be human? What is the nature of the city and humanity? How does culture and religion fit into all of this?" he says

"For the modern world, the death of God was followed by the disappearance of the question of human nature."

Mr Thiel then considered an argument from the German legal scholar Carl Schmitt (a prominent member of the Nazi Party).

He said Schmitt offered an extreme alternative to John Locke and "all the thinkers of the Enlightenment" by arguing that it was actually part of the human condition to argue about things like religion and the nature of humanity, and to be forced to take sides:

"The high points of politics," declares Schmitt, "are the moments in which the enemy is, in concrete clarity, recognised as the enemy."

He then weighed up Schmitt's argument, and considered other perspectives from the French literary theorist René Girard and political philosopher Leo Strauss:

"The intellectual paralysis of [our] self-knowledge has its counterpoint in the political paralysis embedded in our open system of government," Mr Thiel wrote.

"Still, there are more possibilities for action than first appear, precisely because there are more domains than those enumerated by the conventional legal or juridical system.

"Strauss also reminds us of the exceptional framework needed to supplement the American regime: 'The most just society cannot survive without 'intelligence, i.e., espionage,' even though '[e]spionage is impossible without a suspension of certain rules of natural right.' [...]

"Instead of the United Nations, filled with interminable and inconclusive parliamentary debates that resemble Shakespearean tales told by idiots, we should consider Echelon, the secret coordination of the world's intelligence services, as the decisive path to a truly global pax Americana."

Why am I talking about this?

Because it's important to know how Mr Thiel thinks about things.

He's one of the most important figures in 21st century American capitalism, and a hugely influential figure in Silicon Valley.

He was one of the co-founders of Paypal (with Elon Musk), he made an early investment in Facebook and a large number of startups including AirBnb, Spotify, LinkedIn, SpaceX and Lyft.

And he's deeply involved with the military-industrial complex.

He was a co-founder of Palantir Technologies, which sits on the frontier of big data analytics, intrusive government, and the national security and surveillance state.

If you haven't heard of the company, this Forbes piece from 2013 is a fascinating place to start: "How A 'Deviant' Philosopher Built Palantir, A CIA-Funded Data-Mining Juggernaut."

Crypto and the abuse of money by governments

Finally, Mr Thiel is also a big supporter of the cryptocurrency movement.

And here we'll jump back to Friedrich Hayek for a second.

In Professor Hayek's campaign to rid the world of the influence of the British economist John Maynard Keynes, he argued that national governments should be stripped of their exclusive right to issue currency and have people use it.

"There could be no more effective check against the abuse of money by the government than if people were free to refuse any money they distrusted and to prefer money in which they had confidence," Hayek wrote.

"Let us deprive governments (or their monetary authorities) of all power to protect their money against competition: if they can no longer conceal that their money is becoming bad, they will have to restrict the issue."

When Hayek visited Australia in 1976, he told an audience at the Sydney Opera House that private companies should be allowed to issue their own currencies.

Below is part of the transcript of that conversation. The host of the event was the ABC's Robert Moore:

HAYEK: I have come to the conclusion that so long as the control of money is in the hands of democratic government, there is no chance at all of getting a sensible monetary policy … (laughter and applause from audience).

… and my latest and very serious suggestion is that we ought to take from government the monopoly of issuing money and allow private enterprise to do so (laughter and applause from audience).

Don't laugh. I have come to the conclusion that it was the fact that private enterprise has not been allowed to provide us with decent money, which the public like to use, but that we were forced to use the government money, that the main weakness ascribed to capitalism and industrial fluctuations are really due. If private enterprise had been allowed to provide itself with decent money, it would have long ago escaped industrial fluctuations.

MOORE: When you say "money", do you mean money? I mean literally …

HAYEK: I mean money, yes.

MOORE: … private enterprise coining its own coins? Or …

HAYEK: Just don't make one mistake. Of course I do not suggest that competing firms should be allowed to issue dollars. I think they would have to issue monies with different denominations which would compete with each other and give the public the opportunity to use the money which they trusted. Those who abused the position would very soon be driven out of the market and the few that survived would provide us with … would survive because they provided us with decent money.

Can you imagine how that must have sounded to an Australian audience in the mid-1970s?

At the time, Australia had only been using its modern decimal currency for 10 years, having switched from its old imperial system of pounds and shillings in 1966.

To our modern ears, almost 50 years later, Hayek's vision is much easier to understand. 

Think of the range of cryptocurrencies that exist today and the immense technological architecture that supports their existence.

Central banks (including Australia's Reserve Bank) are currently trying to create their own "central bank digital currencies" in a deliberate effort to not cede ground in the currency-issuing space.

In crypto forums online, you'll often see Hayek mentioned as a visionary.

But back to Mr Thiel.

In 2022, he made headlines after he delivered a passionate speech at a cryptocurrency conference in Miami, where he told the audience we were living through a revolutionary moment and watching "the end of the fiat money regime."

He called Warren Buffett a "sociopathic grandpa" for some anti-crypto comments he'd made, and he criticised central banks for their slow uptake of digital technology.

"We have to go out from this conference and take over the world," he said.

It's an interesting place to be.

If private companies are now constantly trying to undermine governments' currency-issuing monopolies, will it make governments stronger or weaker in the face of external threats?

And where will our modern surveillance state, which operates in the shadows with immense amounts of data, lead our society?

What exactly is capitalism in the 21st century?